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l\epublic of tbe
~upreme Qeourt

G.R. No. 199601

BRION,**Acting Chairperson,

- versus -



3 NOV 2015



We resolve the petition for review on certiorari under Rule 45 of the
Rules of Court 1 filed by Philippine Commercial International Bank (PCIB)
assailing the May 23, 2011 decision2 and the December 7, 2011 resolution3
of the Court of Appeals (CA) in CA-G.R. CV No. 68288. The CA affirmed
the May 25, 1999 decision of the Regional Trial Court of Makati City,
Branch 145 (RTC) in toto.

Designated as Acting Member in lieu of Associate Justice Antonio T. Carpio, per Special Order
No. 2282 dated November 13, 2015.

Designated as Acting Chairperson in lieu of Associate Justice Antonio T. Carpio, per Special
Order No. 2281 dated November 13, 2015.

Designated as Additional Member per Raffle dated September 5, 2012.

Rollo, pp. 8-25.
Id. at 27-38; penned by Associate Justice Danton Q. Bueser, and concurred in by Associate Justice
Hakim S. Abdulwahid and Associate Justice Ricardo R. Rosario.
Id. at 40-41.


G.R. No. 199601

Josephine D. Gomez (Josephine) was a teller at the Domestic Airport
Branch of the PCIB when a certain Colin R. Harrington opened Savings
Account No. 373-28010-6 with said branch in January 1985.
The following day, Harrington presented two (2) genuine bank drafts
dated January 3, 1985, issued by the Bank of New Zealand. The first draft
was in the sum of US$724.57 payable to C.R. Harrington, while the
second draft was in the sum of US$2,004.76 payable to Servants C/C.R.
The PCIB, on the other hand, alleged that it was a certain Sophia
LaO, as a representative of Harrington, who presented the bank drafts for
Upon receipt of the bank drafts, Josephine asked her immediate
supervisor, Eleanor Flores, whether the drafts payable to Servants C/C.R.
Harrington were acceptable for deposit to the savings account of
Harrington. When Flores answered in the affirmative, and after receiving
from the banks foreign exchange supervision a Philippine Currency
conversion of the amounts reflected in the drafts, Josephine received the
deposit slip. Thereafter, the deposits were duly entered in Harringtons
savings account.
On two (2) separate dates, a certain individual representing himself as
Harrington withdrew the sums of P45,000.00 and P5,600.00. Subsequently,
the bank discovered that the person who made the withdrawals was an
impostor. Thus, the bank had to pay Harrington P50,600.00 representing the
amounts of the bank drafts in his name.
The PCIB issued a memorandum asking Josephine to explain why no
disciplinary action should be taken against her for having accepted the bank
drafts for deposits. Josephine reasoned that being a new teller she was not
yet fully oriented with the various aspects of the job. She further alleged
that she had asked the approval of her immediate supervisor prior to
receiving the deposits.
On November 14, 1985, the PCIB deducted the amount of P423.38
from Josephines salary. Josephine wrote the PCIB to ask why the
deduction was made.
After due investigation on the matter, the PCIB issued another
memorandum finding Josephine grossly negligent and liable for performing
acts in violation of established operating procedures. The memorandum
required Josephine to pay the amount of P50,600.00 through deductions in
her salary, allowance, bonuses, and profit sharing until the amount is fully


G.R. No. 199601

Josephine wrote the PCIB to ask for the basis of its findings that she
was grossly negligent and liable to pay the amount of P50,600.00. During
trial, the RTC found that the PCIB did not even respond to this letter. PCIB,
however, alleged that it had replied to Josephines letter, and explained that
she was afforded due process and the deductions made prior to January 15,
1986, were merely a withholding pending the investigation.
The PCIB also admitted that as early as January 15, 1986, it had
started to deduct the amount of P 200.00 from Josephines salary as well as
50% of her bonuses and profit sharing.
On February 10, 1986, Josephine filed a complaint for damages with
prayer for preliminary injunction before the RTC of Makati City. She
claimed that the PCIB had abused its right by gradually deducting from her
salary the amount the bank had to pay Harrington.
The PCIB filed its answer with counterclaims and a separate
complaint with the RTC of Makati City, which was raffled to Branch 149.
In its May 25, 1999 decision, the RTC rendered judgment in favor of
Josephine and ordered the PCIB to pay her actual damages in the amount of
P5,006.00 plus 12% interest from filing of the complaint; moral damages in
the amount of P150,000.00; and attorneys fees in the amount of P50,000.00.
The RTC considered the PCIBs manner of deducting from the salary
and allowance of Josephine as having been rendered in bad faith and
contrary to morals, good custom, and public policy. This was borne out by
the fact that the PCIB had already deducted from her salary before Josephine
received the memorandum finding her liable for the P50,600.00. In addition,
while there were other individuals involved in this incident, it appeared that
it was only Josephine who was made solely responsible.
On appeal, the PCIB argued that the RTC had no jurisdiction over the
case because it was a labor dispute, which the labor tribunals are more
competent to resolve. It also maintained that there was no factual or legal
basis for the RTC to make it liable for damages and to pay Josephine.
In its May 23, 2011 decision, the CA affirmed the May 25, 1999 RTC
decision. It held that the PCIB was estopped from questioning the
jurisdiction of the RTC because it had filed an answer with counterclaims
and even initiated a separate case before a different branch of the RTC. It
upheld the RTCs findings and conclusion in awarding damages and
attorneys fees to Josephine because there was no reason to disturb them.
The CA, subsequently, denied the PCIBs motion for reconsideration
on December 7, 2011; hence, the PCIB filed the present petition.
First, the PCIB contends that the CA gravely erred in ruling that its
actions were in total and wanton disregard of Articles 19 and 21 of the Civil


G.R. No. 199601

Code because the courts a quo summarily imputed bad faith on how it had
treated Josephine.
Second, the PCIB maintains that the CA gravely erred in awarding
moral damages and attorneys fees to Josephine absent any basis for it while
averring that bad faith cannot be presumed and that Josephine had failed to
prove it with clear and convincing evidence.
We DENY the present petition for lack of merit.
The civil courts have jurisdiction
over a case when the cause of action
does not have a reasonable causal
connection from the employeremployee relationship.
Although the PCIB opted not to raise the issue before this Court, we
find it prudent and imperative to justify why the RTC had jurisdiction to take
cognizance of Josephines complaint despite the fact that her cause of action
arose because her employer arbitrarily deducted from her salary an act
expressly prohibited by our labor laws.4
Article 224 [217] of the Labor Code provides that the Labor Arbiters
have original and exclusive jurisdiction to hear and decide claims for actual,
moral, exemplary, and other forms of damages arising from employeremployee relations. The legislative intent appears clear to allow Labor
Arbiters to award to an employee not only the reliefs provided by our labor
laws, but also moral and other forms of damages governed by the Civil
Code. Specifically, we have mentioned, in fact, that a complaint for
damages under Articles 19, 20, and 21 of the Civil Code would not suffice to
keep the case without the jurisdictional boundaries of our labor courts
especially when the claim for damages is interwoven with a labor dispute.5
Nevertheless, when the cause of action has no reasonable connection
with any of the claims provided for in Article 224 of the Labor Code,
jurisdiction over the action is with the regular courts.6 Here, since

See Article 113 of the Labor Code.

San Miguel Corp. Employees Union-PTGWO v. Judge Bersamira, G.R. No. 87700, June 13, 1990,
264 Phil. 875, 884, to wit:

The claim of SanMig that the action below is for damages under Articles 19, 20 and 21
of the Civil Code would not suffice to keep the case within the jurisdictional boundaries
of regular Courts. That claim for damages is interwoven with a labor dispute existing
between the parties and would have to be ventilated before the administrative machinery
established for the expeditious settlement of those disputes. To allow the action filed
below to prosper would bring about "split jurisdiction" which is obnoxious to the orderly
administration of justice (Philippine Communications, Electronics and Electricity
Workers Federation vs. Hon. Nolasco, L-24984, 29 July 1968, 24 SCRA 321).
Yusen Air and Sea Service Phils. v. Villamor, G.R. No. 154060, August 16, 2005, 504 Phil. 437,
446-447, citing Ocheda v. Court of Appeals, G.R. No. 85517, October 16, 1992, 214 SCRA 629.


G.R. No. 199601

Josephines cause of action is based on a quasi-delict or tort under Article 19

in relation to Article 21 of the Civil Code, the civil courts (not the labor
tribunals) have jurisdiction over the subject matter of this case.
To be sure, the case of Singapore Airlines Ltd. v. Ernani Cruz Pao is
Upon the facts and issues involved, jurisdiction over the present
controversy must be held to belong to the civil courts. While seemingly
petitioner's claim for damages arises from employer-employee relations,
and the latest amendment to Article 217 of the Labor Code under PD No.
1691 and BP Blg. 130 provides that all other claims arising from
employer-employee relationship are cognizable by Labor Arbiters, in
essence, petitioner's claim for damages is grounded on the "wanton failure
and refusal" without just cause of private respondent Cruz to report for
duty despite repeated notices served upon him of the disapproval of his
application for leave of absence without pay. This, coupled with the
further averment that Cruz "maliciously and with bad faith" violated the
terms and conditions of the conversion training course agreement to the
damage of petitioner removes the present controversy from the coverage
of the Labor Code and brings it within the purview of Civil Law.
Clearly, the complaint was anchored not on the abandonment per
se by private respondent Cruz of his job as the latter was not required in
the Complaint to report back to work but on the manner and consequent
effects of such abandonment of work translated in terms of the
damages which petitioner had to suffer.7 [emphasis and underscoring

In the present case, Josephine filed a civil complaint for damages

against the PCIB based on how her employer quickly concluded that she was
negligent and hence arbitrarily started to deduct from her salary. Clearly,
without having to dwell on the merits of the case, Josephine opted to invoke
the jurisdiction of our civil courts because her right to fair treatment was
The discussion in Quisaba v. Sta. Ines-Melale Veneer & Plywood, Inc.
is just as relevant as it is illuminating on the present case, to wit:
Although the acts complained of seemingly appear to constitute "matters
involving employee-employer relations" as Quisaba's dismissal was the
severance of a preexisting employee-employer relation, his complaint is
grounded not on his dismissal per se as in fact he does not ask for
reinstatement or backwages, but on the manner of his dismissal and
the consequent effects of such dismissal.
The "right" of the respondents to dismiss Quisaba should not be confused
with the manner in which the right was exercised and the effects flowing
therefrom. If the dismissal was done anti-socially or oppressively, as the
complaint alleges, then the respondents violated article 1701 of the Civil
Code which prohibits acts of oppression by either capital or labor against

G.R. No. L-47739, June 22, 1983, 122 SCRA 671, 676.


G.R. No. 199601

the other, and article 21, which makes a person liable for damages if he
willfully causes loss or injury to another in a manner that is contrary to
morals, good customs or public policy, the sanction for which, by way of
moral damages, is provided in article 2219, no. 10 (Cf. Phil. Refining Co.
v. Garcia, L-21962, Sept. 27, 1966, 18 SCRA 107).8

From the foregoing, the case at bar is intrinsically concerned with a

civil dispute because it has something to do with Josephines right under
Article 19 of the Civil Code, and does not involve an existing employeremployee relation within the meaning of Article 224 of the Labor Code.
Josephines complaint was, therefore, properly filed with and exclusively
cognizable by the RTC.
Questions on whether there was a
preponderance of evidence to justify
the award of damages or whether
there was a causal connection
between the given set of facts and
the damage suffered by the private
complainant are questions of fact.
The Courts jurisdiction under a Rule 45 review is limited to
reviewing perceived errors of law, which the lower courts may have
committed. The resolution of factual issues is the function of the lower
courts whose findings, when aptly supported by evidence, bind this
Court. This is especially true when the CA affirms the RTCs findings.
While this Court, under established exceptional circumstances, had deviated
from the above rule, we do not find this case to be under any of the
Essentially, what the PCIB seeks is a relief from the Court on the
issue of the propriety of the award of damages. On this point alone, the
petition must fail, as a Rule 45 petition bars us from the consideration of
factual issues, especially when both the RTC and the CA were consistent
with their rulings.
Nevertheless, we still affirm the assailed CA rulings even if we were
to disregard these established doctrinal rules.
Article 19 of the Civil Code provides that every person in the exercise
of his rights and in the performance of his duties must act with justice, give
everyone his due, and observe honesty and good faith. The principle
embodied in this provision is more commonly known as the abuse of right
principle. The legal sanctions for violations of this fundamental principle
are found in Articles 209 and 2110 of the Civil Code. We explained how

G.R. No. L-38088, August 30, 1974, 58 SCRA 771, 774.

Article 20. Every person who, contrary to law, willfully or negligently causes damage to another,
shall indemnify the latter for the same.
Article 21. Any person who willfully causes loss or injury to another in a manner that is contrary
to morals, good customs, or public policy shall compensate the latter for damages.


G.R. No. 199601

these two provisions correlate with each other in GF Equity, Inc. v.

[Article 19], known to contain what is commonly referred to as the
principle of abuse of rights, sets certain standards which must be observed
not only in the exercise of one's rights but also in the performance of one's
duties. These standards are the following: to act with justice; to give
everyone his due; and to observe honesty and good faith. The law,
therefore, recognizes a primordial limitation on all rights; that in their
exercise, the norms of human conduct set forth in Article 19 must be
observed. A right, though by itself legal because recognized or
granted by law as such, may nevertheless become the source of some
illegality. When a right is exercised in a manner which does not
conform with the norms enshrined in Article 19 and results in damage
to another, a legal wrong is thereby committed for which the
wrongdoer must be held responsible. But while Article 19 lays down a
rule of conduct for the government of human relations and for the
maintenance of social order, it does not provide a remedy for its violation.
Generally, an action for damages under either Article 20 or Article 21
would be proper.11 [emphasis supplied]

Both the RTC and the CA found the acts of the PCIB were in clear
violation of Article 19 of the Civil Code and held the PCIB liable for
damages. While the PCIB has a right to penalize employees for acts of
negligence, the right must not be exercised unjustly and illegally. In the
instant case, the PCIB made deductions on Josephines salary even if the
investigation was still pending. Belatedly, the PCIB issued a memorandum
finding Josephine grossly negligent and requiring her to pay the amount
which the bank erroneously paid to Harringtons impostor. When Josephine
asked for legal and factual basis for the finding of negligence, the PCIB
refused to give any. Moreover, the PCIB continued to make deductions on
Josephines salary, allowances, and bonuses.
The trial court and the CA also noted that while Josephine was
penalized, other employees of the bank involved in the subject transactions
were not. It was Josephine who was made solely responsible for the loss
without giving any basis therefor. It was emphasized that the subject deposit
could not have been received by the bank and entered in Harringtons
savings account without the participation of the other bank employees. The
PCIB could have exercised prudence before taking oppressive actions
against Josephine.
All told, we find nothing in the record which would warrant the
reversal of the position held by the RTC and the CA. Based on the above
discussion, we find the award of moral damages and attorneys fees in
Josephines favor proper.
WHEREFORE, the petition for review on certiorari is DENIED and
consequently, the May 23, 2011 decision and the December 7, 2011

G.R. No. 156841, June 30, 2005, 462 SCRA 466, 479-480, citing Globe Mackay Cable and Radio
Corporation v. Court of Appeals, G.R. No. 81262, August 25, 1989, 176 SCRA 778, 783-784.


G.R. No. 199601

resolution of the Court of Appeals in CA-G.R. CV No. 68288 are

AFFIRMED in toto.

Associate Justice



Aisociate Justice

..........- -

Associate Justice

I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court's Division.


Associate Justice
Acting Chairperson, Second Division

Pursuant to Section 13, Article VIII of the Constitution, and the

Division Acting Chairperson's Attestation, I cert~fy that the conclusions in
the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court's Division.


Chief Justice